EUR/USD Forex Signal: Bullish Breakout Above $1.1400

Adam Lemon

Yet resistance at $1.1456 may prove to be strong.

Last Week’s Wednesday EUR/USD signal was not triggered as there was no bearish price action when the price first reached the resistance levels identified at $1.1316 and $1.1336.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today only.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1456 or $1.1514.
  • Place the stop loss 1 pip above the local swing high.
  • Move the stop loss to break even once the trade is 20 pips in profit.
  • Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

  • Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1394 or $1.1353.
  • Place the stop loss 1 pip below the local swing low.
  • Move the stop loss to break even once the trade is 20 pips in profit.
  • Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

EUR/USD Analysis

I wrote on Wednesday last week that we had a close fight between bulls and bears and it was hard to tell who is going to win over the medium term. I thought that the best potential trade would be a long from $1.1261 or $1.1250. Although those levels were never quite reached, I was correct to see the best odds as on the long side, as has been proven by the slow rise over the past week leading to yesterday’s breakout beyond the $1.1400 area.

The Forex market is clearly dominated by weakness in the US Dollar, which has been prevalent for some days, and was driven technically by a longer-term rejection of a key resistance level in the US Dollar Index. This weakness was confirmed yesterday by the increasing pace of US CPI (inflation) which has had the effect of sparking a further selloff in the US Dollar. Almost every currency has risen against the USD in recent hours and the euro is no exception despite its recent relative weakness as a currency, which can be clearly seen when you look at a chart of EUR/GBP for example.

It looks like the odds are clearly with the bulls on the long side, but the US Dollar Index is sitting in a potentially supportive price zone now and looking at the price chart below we can see the price has been held over recent hours by the resistance level at $1.1456. I am not convinced that we will see a break above this level today, but I think the best potential is still on the long side. Therefore, my ideal longer-term setup for this currency pair would be a retracement to the support level at $1.1394 with a bullish bounce there. In the meantime, a short scalp from a bearish rejection of $1.1456 is likely to be the best opportunity, but probably will need to be taken and managed on a short time frame.

EUR/USD

Concerning the USD, there will be a release of PPI data at 1:30pm London time. There is nothing of high importance scheduled regarding the EUR.

Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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